Praxis II: Economics Content Knowledge Exam Prep

Answer - C - This is an example of normative economics.

Key Takeaway: Normative economics studies the way the economic realities of a society should be and not how it is. For example, those wishing to raise the standard of living for the lowest paid members of a society can propose to raise minimum wage figures. Alternatively, the provision of tax cuts to small businesses can lead to more hiring and an increase in standards of living.